Docs vs. HMOs: Are HMOs guilty of racketeering?

What started as a seemingly frivolous action on the part of a frustrated Alabama physician has blossomed into a full-fledged problem for the nation's top health insurers.  In January, 2000, when Dr. Eugene Mangieri filed a suit against a health plan accusing the plan of racketeering, most observers thought the case would be thrown out by the first court that received it.  However, not only has the suit proceeded, but also it has been joined by dozens of other individuals and organizations, all accusing HMOs of racketeering and extortion under federal RICO statutes.

The particulars of these suits revolve around HMOs allegedly breaching physicians' contracts, conspiring to withhold or unreasonably delay payments to doctors, misleading patients about how they determine what services are covered, and failing to disclose to subscribers that coverage decisions are based on financial considerations and not solely on medical necessity (as they all seem to claim.)  The lawsuits come from several states and physician and patient groups, but were lumped under one action and sent before one federal judge (U.S. District Judge Federico A. Moreno in Miami, FL,) because they were so similar in nature.

Judge Moreno ruled in March, 2001 that discovery could begin, but the HMOs appealed on the grounds that any complaints physicians might have should be resolved through arbitration and not by the courts.  But now, last month, the 11th U.S. Circuit Court of Appeals upheld the lower court's ruling that discovery should begin.  The doctors are alleging conspiratorial behavior on the part of HMOs, the appeals court noted, and conspiracies are not to be resolved through arbitration.  At this time it is not clear whether the managed care health plans named in the suit - which include Humana, CIGNA, Aetna and Prudential - will appeal this decision to the U.S. Supreme Court.

In any case, the health plans seem determined to prevent discovery from proceeding.  Under discovery, internal documents that describe the behavior of HMOs, as they decide what to pay for and when to pay, would be made available to the plaintiffs and ultimately to the public. 

DrRich comments:

HMOs insist on maintaining the public fiction that they always act in the best interests of their subscribers.  This stance is so patently false that virtually nobody believes it any more.  They are businesses that need to make a profit, and they can't make a profit by doling out all the health care their subscribers want or need.  Even the U.S. Supreme Court has recognized that HMOs are supposed to ration health care - after all, that's what society told them to do (via the legislature.)  Why can't the HMOs just admit it? "Sure we're making decisions based on economics," they might say, "what the heck did you think we were doing?"

Instead, they've boxed themselves in by maintaining a fiction, just like the tobacco companies did before them. How much better off would the tobacco companies have been if they'd just said, "Of course tobacco causes heart disease, stroke and cancer.  Everybody's known that for years - we even print it on every box we sell."

But now, like the tobacco companies, health plans had better prepare to pay up when discovery turns up those incriminating internal documents, and the rest of us profess to be shocked, shocked, when the machinations of these evil organizations are finally revealed to us.

May, 2002

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